Hyderabad: RBI on Thursday told the Hyderabad High Court that the Central government had decided to demonetise Rs 1000 and Rs 500 notes after noticing that these high value notes were used for the storage of black money and circulation of fake currency in the country.
In his counter affidavit, RBI assistant general manager Manbhajan Misra submitted that the note ban was in the best interest of the country and in furtherance of the objects sought to achieved by the RBI and the RBI Act i.e. to regulate issues of banknotes and keeping reserves with a view of securing monetary stability in India.
Mr Misra filed the affidavit before the court following to its direction on petition challenging the government’s demonetisation notification. He told the court that the notification which restricts the withdrawal of money from the bank accounts is in the interest of the society to serve large number of depositors and make available of currency at least in limited extent to maximum members of people serve their needs.
RBI, he said, is always open for the account holders to doing online transactions without limit. He submitted that this process would not involve any deprivation of property of the genuine bank note holder.
The RBI has contended that Section 7 of the RBI Act states that the Centre may from time to time give direction to the RBI as it may, after consultation with the governor.
The RBI has contended that the Centre has the power to demonetise the currency under Section 26(2) of the RBI Act.
